We’re digging deeper into the roles of donor advised funds (DAFs) at community foundations, sharing examples of DAFs in action around the state to learn more about their role in communities. 

As we close out the year and reflect upon the rich stories shared in 2021, we are learning how Midland Area Community Foundation (MACF) is leveraging DAFs to advance community transformation.  

“Our DAF holders are people who believe in the power of philanthropy to help address difficult issues. Our DAFs are intended for people who believe in this community and want to continue to help this community move forward in very innovative ways,” Sharon Mortensen, president and CEO of MACF said. 

At MACF, they have seen DAF holders invest in large community projects, inspire the next generation for future giving and respond to critical community needs amid the pandemic and beyond.  

A snapshot of DAFs hosted by MACF:

•    In 2020, DAFs at MACF granted $1,792,691, an increase from $397,183 in 2019.

•    77% are endowed DAFs and 23% are non-endowed. 

•    47% of DAFs paid out 5% or more in 2020.

•    38% paid out 9% or more in 2020.

•    58% of MACF-hosted DAFs made a grant in 2020.

As outlined in CMF’s FAQs on DAFs and Payout Rates, an endowed DAF is established with the intent of long-term use. A relatively high minimum level must be maintained in the fund to ensure sufficient investment returns which are then granted to the community. 

A non-endowed (spendable) DAF is intended to be used by donors to fill the fund and payout the majority of the fund within a short period of time. The donor can then refill and reuse the account regularly to support their charitable contributions.

MACF shared examples of the ways donors have used endowed and non-endowed DAFs to make an impact and meet their philanthropic goals. 

One fundholder, Mortensen shared, built their endowed fund up to “save” for a project which will renovate a river site in the community.

“The fundholder is an avid bike rider and advocate for the environment. He has been holding some of his resources to invest in the renovation of this area that will become a natural area with walking trails. He’s been holding on to that because he knows it’s a big project and something he so strongly believes in,” Mortensen said. 

One DAF holder at the community foundation established a DAF to promote future giving within their family and as a result inspired others to give, too.

“The family meets with their kids on a quarterly basis, they have dinner and talk about where they want to give out into the community,” Emily Schafer, director of development at MACF said. “They presented at one of our annual events and motivated a couple other community members to open their own DAF because they were so inspired.”

According to Schafer, in the case of one such DAF that was started in response, the fundholder passed away and designated his three nieces as the successive generation of advisors. 

“They are keenly passionate about giving to the things that their uncle was passionate about. It’s their way to honor him and you can tell they’re really connected to their uncle through the fund,” Schafer said. 

MACF has also seen DAFs serve as tools to support immediate crisis response efforts.

In 2020, the Midland community faced dual crises with the pandemic and devasting flooding after a dam failure. Mortensen said DAF holders stepped up to support the community during that time. 

“They asked what they had as spendable in their funds, and how much could they give in response to the flooding. They reached out in light of the huge need and wanting to do something. It was the immediate ‘what resources do I have, let me look at my DAF and I’ll use what I have there to be able to give’,” Mortensen said. 

Mortensen shared that DAFs are another tool to inspire giving and to extend the power that the community foundation has to help with community transformation. 

“It’s based on the integrity that we have in the community as leaders in philanthropy that people trust us with their dollars so they can go out and grant to the causes that they’re most passionate about.” Schafer said.

Want more?
 

CMF released phase three of our payout rate research series, Analysis of Donor Advised Funds from a Community Foundation Perspective, focusing on the payout rates of donor advised funds (DAFs) within the context of the philanthropic sector, specifically the payout rates of DAFs administered by Michigan community foundations. CMF has also crafted a comprehensive FAQ on DAFs and Payout Rates to help our community of philanthropy and sector partners navigate phase 3 of our payout rate research series.

Throughout this year, CMF members shared their stories on the roles and functions of DAFs in communities both within our sector and more broadly. We invite you to read more impactful DAF stories emerging from our network of Michigan community foundations.